People Bank of China flooding 340 billion yuan into the financial system

Another government intervention, China's central bank said on Thursday it was funnelling 340 billion yuan ($52 billion) into the financial system, the second injection in three days to meet surging demand for funds ahead of the Lunar New Year holiday. Also to boost stocks market in Hangseng

As reported before on Tuesday, the People's Bank of China (PBoC) poured 440 billion yuan ($67 billion) into the system through regular open market operations, which Bloomberg News said was the biggest in three years. Very massive amounts

Usually Chinese companies typically pay salaries and bonuses before the holiday, which falls in early February this year. People also traditionally exchange cash and gifts during the period. The PBoC last week flooded the financial system with more than 1.5 trillion yuan.

Forex traders and investor analysts say the recent cash injections are a replacement for monetary easing as the PBoC has become reluctant to cut reserve requirement ratios -- the proportion of money banks must put aside -- on worries over the impact on China's yuan currency, which has been weakening.

As reported before, China's economy grew at its slowest rate in a quarter of a century in 2015, at 6.9 percent, raising expectations for further cuts in interest rates or reserve requirements.

Source: AFP